This paper considers an intertemporal decision problem in which the agent has limited foresight. It offers an interpretation of why people may smoke when they are young - and arguably have a short horizon of foresight and refrain from smoking when they get older - and their foresight is better.

This paper considers an intertemporal decision problem in which the agent has limited foresight. It offers an interpretation of why people may smoke when they are young - and arguably have a short horizon of foresight – and refrain from smoking when they get older - and their foresight is better.

Slight systematic deflation is ideal in a growing economy. However, adopting negative inflation targeting would not be stable. Instead, we should use trend deflation under price--level targeting. Copyright Institute of Economic Affairs 2003

"Different measures of inflation have their pros and cons. Changing the Monetary Policy Committee's inflation target to an inflation measure that excludes housing costs and is not widely used by economic decision-makers may well be problematic." Copyright (c) Institute of Economic Affairs 2004.